Act now on mis-sold endowments: new article

mayb_2

Might be worth checking the main site and the which site to see what the thinking is on that one Alison - there may be advised ways of going about it to get the best result.

dunstonh

Hmmm I have a little issue here with this - if the letter says that your endowment will be short by x amount - that means that you are x amount short of paying off what a repayment mortgage would have paid off. So how can a redress be for less than that amount??

The projections are examples using certain growth rates. The actual rate of return could be higher or lower. The future is unknown.

So, on an upheld complaint they look at the position now and doing that calculation here (which is basically finding out what the repayment mortgage balance would have been at this point and comparing that to the interest only mortgage minus the surrender value of the endowment). This example shows only a £72 difference suggesting the endowment is on track more or less.

The shortfall, if there was one only happens on maturity. In the interim the values zig zag their way to maturity.

What you are really saying here is that in fact redress does not determine the real position regarding a repayment mortgage it just says if you had paid x amount into a repayment mortgage you would be here now. There is a difference there and it would appear to be in the favour of the endowment company. Nothing new there then.

Not quite that and there is no advantage one way or the other.

Lets say the mortgage was £100k on interest only. If a repayment mortgage had been down it would be say £60k at the point of complaint. If the complaint is upheld then the endowment provider/adviser has to put the mortgage in that £60k position. The surrender value of the policy is used and if the surrender value is short of the required £40k then a redress payment is made. If the surrender value of the endomwent is £39,930 then the redress payment would be £70. If the surrender value was £41,000 then no redress is payable. Quite common nowadays with better unit linked plans.

The projections themselves, as I have said many times, are not a true reflection of the likely outcome of the endowment more often than not. For all we know, this HBOS endowment is doing 8.3% a year average. A projection at 6% is going to show a figure with it achieving 6% not 8.3%. So it would be showing a shortfall position then because the projection is understating its likely potential.

ericabro

Hi All, Thanks for all your help your all brilliant!! If we now ask for the cheque plus the endownment funds can we still claim that we were missold? or by accepting the money is that the end of it? we have sent them the Which letter and this letter has crossed with that saying that our complaint had been upheld and that the difference is £72.00 but as this cheque was originally issued last year our endownment was on target minus the £72.00 and the differnce now is nearly £1500 how can this be right? Thanks Erica

dunstonh

If we now ask for the cheque plus the endownment funds can we still claim that we were missold?

Your complaint has been upheld. End of story. You have a result.

the differnce now is nearly £1500 how can this be right?

They dont pay the projected shortfall at a given percentage rate. They pay the difference between where you would have been on a repayment mortgage at this point and the interest only mortgage minus the surrender value. In this case £72.

turbobob

ericabro wrote: »

Hi All, Thanks for all your help your all brilliant!! If we now ask for the cheque plus the endownment funds can we still claim that we were missold? or by accepting the money is that the end of it? we have sent them the Which letter and this letter has crossed with that saying that our complaint had been upheld and that the difference is £72.00 but as this cheque was originally issued last year our endownment was on target minus the £72.00 and the differnce now is nearly £1500 how can this be right? Thanks Erica

If I'm understanding this correctly you had your complaint upheld last year and received an offer of £72 redress, which you did not accept. The policy has since matured with a shortfall?

If they recalculated to date, the redress would probably increase*. However, I don't think they are under any obligation to do this. Your rights to go to FOS expire 6 months after they issue the final decision letter.

* - assuming the calculation has been done using standard assumptions. The redress would not equal the shortfall if you had, for example, converted part of your mortgage to repayment or made overpayments to your mortgage.

ericabro

Yes thats whats happened last year they said the differnce between £15900 and the projected was £72.00 now thats changed as the difference now is £1500 on maturity. when hubby phoned up about this they did keep saying to him that they had enclosed a letter saying that if we cashed this it was finished with but we kept in contact with them saying we would not cash this in case something like this happened, so can we claim missale or is this it?

turbobob

They've essentially admitted mis-selling by upholding your complaint. Like I said, I don't think theres any obligation for them to do an updated calculation though. A lot of providers withdraw any offer after a period, say 6 months.

dunstonh

I follow you now. It wasnt the projection but the fact you waited a year and its matured lower than last years value (no surprise seeing as the markets dropped upto 20% in that period, although recovered 10% of it recently).

The fact doesnt change though that the complaint was upheld and a calculation done at the time and redress offered. You dont get a second bite at the cherry. Nothing is impossible but the company is under no obligation to pay any increase over the amount offered at the time if the calculation they did then was done correctly. You took a decision at that time to keep the endowment running and that decision hasnt paid off so they are unlikely to accept that decision was their fault.

mayb_2

It sound like it could be too late as you have already claimed a missale ericabro - what happens with the cheque though as you haven't cashed it, and why did you take that decision of waiting a year when you could have paid the cheque off of your mortgage and kept the endowment running if you had wished to. Were your options on this properly explained at the time I wonder. If I were you I would cash the cheque as you have to repay your mortgage at this time I assume. Either speak to the Ombudsman and ask them what their position would be on this or put in a complaint about what has happened to the Ombudsman and see if he upholds it. That way at least your mortgage is not continuing to cost you interest at the same rate and you may have a chance of making up the difference.

If it is any consolation your shortfall is far less than many others caught in the endowment trap. Ours was projected at £25,000 and growing. So not the best outcome for you but it could have been worse.

ericabro

Hi We sent the cheque back to them so I guess that we will have to wait and see what comes next and just accept it at least now I can understand it more clearly now you have explained it, I dont want to start another long drawn out battle with these people,Unfortunatly we have moved house and this is no way going to pay of this mortgage if only, We changed to a current account mortgage which has also been a disaster (4 wasted years) thats with the FOC and were still waiting on there ruling on that 12 months after going to them, they are so busy we have not got past the first stage they just keep writing saying that they hope to be able to appoint someone soon to look at our case. hence why we dont want to argue over the endownment as well, I think its one of those things that you either get or you dont (money) and the banks make it as hard as they can to help you understand, so as we had 3 bank accounts with the RBS at the time including savings we feel that they should have told us to shut them down and put all the money in current account ( I think it was past his bedtime) and we didnt do a fact find we didnt know about them I know we have to take some responsibility so please dont give us a hard time.We have now gone for a fixed rate fixed for 3 years and cant pay much of of that without penalties. 10 years left and counting.
I really do appreciate all your hard work helping us understand.
Thanks for all your help
Erica